Amazon EC2 offers a variety of pricing options for different use cases:
On-Demand Instances are ideal for short-term, irregular workloads that cannot be interrupted. No upfront costs or minimum contracts apply. The instances run continuously until you stop them, and you pay for only the compute time you use.
Sample use cases for On-Demand Instances include developing and testing applications and running applications that have unpredictable usage patterns. On-Demand Instances are not recommended for workloads that last a year or longer because these workloads can experience greater cost savings using Reserved Instances.
Reserved Instances are a billing discount applied to the use of On-Demand Instances in your account. There are two available types of Reserved Instances:
- Standard Reserved Instances
- Convertible Reserved Instances
You can purchase Standard Reserved and Convertible Reserved Instances for a 1-year or 3-year term. You realize greater cost savings with the 3-year option.
Standard Reserved Instances: This option is a good fit if you know the EC2 instance type and size you need for your steady-state applications and in which AWS Region you plan to run them. Reserved Instances require you to state the following qualifications:
- Instance type and size: For example, m5.xlarge
- Platform description (operating system): For example, Microsoft Windows Server or Red Hat Enterprise Linux
- Tenancy: Default tenancy or dedicated tenancy
You have the option to specify an Availability Zone for your EC2 Reserved Instances. If you make this specification, you get EC2 capacity reservation. This ensures that your desired amount of EC2 instances will be available when you need them.
Convertible Reserved Instances: If you need to run your EC2 instances in different Availability Zones or different instance types, then Convertible Reserved Instances might be right for you. Note: You trade in a deeper discount when you require flexibility to run your EC2 instances.
At the end of a Reserved Instance term, you can continue using the Amazon EC2 instance without interruption. However, you are charged On-Demand rates until you do one of the following:
- Terminate the instance.
- Purchase a new Reserved Instance that matches the instance attributes (instance family and size, Region, platform, and tenancy).
Spot Instances are ideal for workloads with flexible start and end times, or that can withstand interruptions. Spot Instances use unused Amazon EC2 computing capacity and offer you cost savings at up to 90% off of On-Demand prices.
Suppose that you have a background processing job that can start and stop as needed (such as the data processing job for a customer survey). You want to start and stop the processing job without affecting the overall operations of your business. If you make a Spot request and Amazon EC2 capacity is available, your Spot Instance launches. However, if you make a Spot request and Amazon EC2 capacity is unavailable, the request is not successful until capacity becomes available. The unavailable capacity might delay the launch of your background processing job.
After you have launched a Spot Instance, if capacity is no longer available or demand for Spot Instances increases, your instance may be interrupted.
Savings Plans
AWS offers Savings Plans for a few compute services, including Amazon EC2.
EC2 Instance Savings Plans reduce your EC2 instance costs when you make an hourly spend commitment to an instance family and Region for a 1-year or 3-year term. This term commitment results in savings of up to 72 percent compared to On-Demand rates. Any usage up to the commitment is charged at the discounted Savings Plans rate (for example, $10 per hour). Any usage beyond the commitment is charged at regular On-Demand rates.
The EC2 Instance Savings Plans are a good option if you need flexibility in your Amazon EC2 usage over the duration of the commitment term. You have the benefit of saving costs on running any EC2 instance within an EC2 instance family in a chosen Region (for example, M5 usage in N. Virginia) regardless of Availability Zone, instance size, OS, or tenancy. The savings with EC2 Instance Savings Plans are similar to the savings provided by Standard Reserved Instances.
Unlike Reserved Instances, however, you don’t need to specify up front what EC2 instance type and size (for example, m5.xlarge), OS, and tenancy to get a discount. Further, you don’t need to commit to a certain number of EC2 instances over a 1-year or 3-year term. Additionally, the EC2 Instance Savings Plans don’t include an EC2 capacity reservation option.
Key Differences Between Standard and Convertible Reserved Instances (RIs)
| Feature | Standard RI | Convertible RI |
|---|---|---|
| Discount % | ✅ Higher (up to 75%) | 🔹 Lower (up to 54%) |
| Instance Family Change? | ❌ No | ✅ Yes |
| Instance Size Change? | ✅ Yes (within the same family, for Regional RIs) | ✅ Yes |
| Operating System Change? | ❌ No | ✅ Yes |
| Tenancy Change? | ❌ No | ✅ Yes |
| AZ Change? | ✅ Yes (for Regional RIs) | ✅ Yes |
| Capacity Reservation? | ✅ Yes (for Zonal RIs) | ✅ Yes (for Zonal RIs) |
| Convertible to Another RI Type? | ❌ No | ✅ Yes (Must be of equal or greater value) |
| Selling in AWS RI Marketplace? | ✅ Yes | ❌ No |
| Best For | Stable workloads with predictable usage | Workloads needing flexibility |
📌 Key Takeaways
- Standard RIs offer higher discounts, can be resold, but lack flexibility.
- Convertible RIs provide more flexibility (change instance family, OS, etc.) but cannot be resold and have slightly lower discounts.